Feds, state drop antitrust suit against Michigan Blues

Federal and state attorneys are moving to drop a lawsuit charging Blue Cross Blue Shield of Michigan of using its market position to gain an unfair advantage against its competitors.

The U.S. Department of Justice and the Michigan attorney general asked a federal judge Monday to dismiss their antitrust lawsuit, which claimed Blue Cross illegally used most-favored nation clauses in its contracts with providers to ensure it received lower rates than other insurers.

The legal officials are dropping the case because Michigan Gov. Rick Snyder signed legislation banning the most-favored nation agreements. "The law just enacted by Michigan addresses the department's concerns by eliminating MFNs and ensuring that Michigan consumers will benefit from enhanced health insurance competition," Bill Baer, assistant Attorney General in charge of the Department of Justice's Antitrust Division, said in an announcement.

"Most-favored nation contract language was one tool--but certainly not the only tool--that Blue Cross leveraged in our reimbursement arrangements to ensure high-quality care at reasonable cost," Andrew Hetzel, BCBSM vice president for corporate communications, said in a statement. "Most-favored-nation language is not part of the future model that we strive to create here in Michigan."

But Blue Cross isn't completely off the hook yet. Aetna also sued Blue Cross, alleging that the most-favored nation clauses artificially raised rates and ultimately drove it out of the Michigan insurance market. "We're pleased that the Michigan legislature and insurance commissioner agree with our position that Blue Cross Blue Shield of Michigan's practices only served to stifle competition in the insurance market and harm the state's consumers," Aetna spokeswoman Cynthia Michener toldMichigan Live.